Aug 25, 2013

The onion story. It was all planned. Didn't I say that earlier?

A few days back, I had written about the urgent need to tame the wholesale/retail trade in onions. This was of course not liked by those who swear in the name of market reforms. They believe that markets have the inherent ability to correct itself, and that the onion price rise was because of poor storage, wastage and of course the weather going wrong.

The Times of India today (Aug 25, 2013) has a detailed report, entitled Traders make Rs 150-crore in 4 days with hoarded onions (click on the link: ). It's investigation shows that traders had mopped up onions from farmers in June/July and even earlier for a price not exceeding Rs 1,500/quintals (or Rs 15/Kg) and had stored it at different places. This created an artificial scarcity.

Between Aug 9 and Aug 19, and more sharply in just four days in between, the demand peaked and the traders made a huge killing. Wholesale prices shot up to Rs 4,300/quintal on Aug 12 and then to Rs 4,500/quintal on Aug 13. That is how the entire carnage was planned and executed.

Further, the report quotes the deputy registrar of the Nasik APMC  (Agriculture Produce Marketing Committee), which is the epicenter of onion production in the country. Accordingly, even now "farmers have around 2.5 lakh tonnes, of which 1.35 lakh tonnes are in the 66 villages under Lasalgaon APMC. This shows supply crunch was artificial." 

Reading all this, and looking at the accompanying illustrations, I am sure your blood would boil. You would definitely want the Govt to crackdown on the trade. But look at what the Chairman of the Commission for Costs and Prices (CACP) Dr Ashok Gulati is suggesting. In an article in the Indian Express a few days back: Know your onions (Aug 22, 2013,, he doesn't propose any strict action against the erring trade. He thinks corruption by the private trade is justified since it is also happening elsewhere. So he is lobbying for setting up processing industry and an efficient value chain (which means more cold stores etc). He is not alone. Read any market ideologue, and you will find him/her quiet when it comes to a crackdown on corrupt practices. I don't understand why all pro-market reformists are supportive of corrupt and dirty marketing practices. There may be some honourable exceptions, but most fall in this category. Remember Kaushik Basu, he went to extent of suggesting legalising giving bribes as the answer.

This makes me wonder why do we nab petty thieves and criminals. If bigger fish can be allowed to get away in the name of market reforms, why not the smaller culprits? #

To know more: Watch this NDTV India discussion on the politics of onions.


Anonymous said...

Didn't quite understand what you are trying to say. Preplanned? You mean like all traders and farmers got together in one big meeting attended by thousands and decided to hoard onion?

You seem to imply storage facility is a bad thing. Are you saying you want farmers to sell onion under pressure of an impending rot setting into their onion stock because of lack of proper storage?

sanjay mehta said...

dont allow any storages. these only help people to do satta. encourage local production, & local disbursement. smaller businesses do not create satta monsters anyway, but way far more productive for the economic health.